US Intensifies Environmental Crime Enforcement

U.S. Intensifies Environmental Crime Enforcement in Puerto Rico and U.S. Virgin Islands

In Short 

The Situation: The U.S. Department of Justice ("DOJ" or "Department") and the U.S. Environmental Protection Agency ("EPA") recently announced the creation of a regional, cross-agency taskforce, targeting environmental crimes in Puerto Rico and the U.S. Virgin Islands ("USVI"). 

The Result: This new taskforce reflects the Biden administration's commitment to pursuing environmental justice, especially in overburdened and underserved communities.  

Looking Ahead: Companies should update their corporate compliance policies, accelerate their internal audits as necessary, and be prepared for an uptick in environmental enforcement in targeted areas and more generally.

On May 11, 2023, the DOJ announced the establishment of a joint taskforce with the EPA and 14 other federal agencies "to investigate and prosecute violations of federal law harming the environment, wildlife and human health, and associated fraud, waste and abuse in [Puerto Rico and the USVI]." DOJ, "Justice Department Announces Launch of Puerto Rico and U.S. Virgin Islands Environmental Crimes Task Force" (May 11, 2023). In the same May 11 announcement, the DOJ also touted the indictments of two Puerto Rican men for violations of both the Clean Water Act and the Rivers and Harbors Act. DOJ, "Two Men Indicted for Environmental Crimes Committed in the Jobos Bay National Estuarine Research Reserve and Las Mareas Community of Salinas, Puerto Rico"(May 11, 2023). The formation of the Puerto Rico/USVI taskforce, paired with these indictments, clearly signals that the DOJ and the EPA intend to aggressively pursue criminal prosecutions alongside civil enforcement actions in the government's pursuit of environmental justice in the region.  

The new taskforce and these indictments add to an expanding line of official enforcement pronouncements and actions that underscore the Biden administration's commitment to environmental justice more generally. This line traces back to the first week of the Biden administration, when President Biden issued Executive Order 14008, Tackling the Climate Crisis at Home and Abroad (January 27, 2021), which emphasized a "government-side approach to the climate crisis" and called for the "deliver[y of] environmental justice in communities all across America." Exec. Order No. 14,008, 86 Fed. Reg. 7,619 (2021). 

This executive order was followed by the DOJ's creation, in May 2022, of the Office of Environmental Justice within the Department's Environment and Natural Resources Division and the issuance of a Comprehensive Environmental Justice Enforcement Strategy. DOJ, "Justice Department Launches Comprehensive Environmental Justice Strategy"(May 5, 2022). Concurrently, the DOJ also reauthorized the use of supplemental environmental projects through the issuance of a rule rescinding 28 C.F.R. § 50.28, which had prohibited such projects in 2017 after decades of use, and the Attorney General released guidelines (titled Guidelines and Limitations for Settlement Agreements Involving Non-Governmental Third Parties, 87 Fed. Reg. 27,936 (May 10, 2022)) proclaiming that the DOJ will resume its reliance upon supplemental environmental projects as a tool for redressing environmental harm to affected communities pursuant to the new guidelines. Per a 2003 EPA memo, supplemental environmental projects are "environmentally beneficial projects that a violator is not otherwise legally required to perform but agreed to undertake in settlement of an enforcement action." 

The Biden administration's environmental enforcement will is reflected in its enforcement activity in Puerto Rico and the USVI. The EPA's Enforcement and Compliance History Online ("ECHO") database, which aggregates historic data on enforcement actions, indicates that the Agency has conducted 3,426 enforcement actions in Puerto Rico and 811 in the USVI, for a total of 4,237 in the region across all industries. See generally EPA, "Enforcement and Compliance History Online: Enforcement Case Search." By comparison, ECHO cites only marginally more such enforcement actions (4,554) in the substantially more populous jurisdiction of California. The formation of the regional task force presages even greater environmental enforcement activity in Puerto Rico and the USVI.

The EPA has, in the past, reached at least 80 settlements in the region with supplemental environmental projects as a feature of the settlement and will resume doing so in the future. Notable examples include the 2011 HOVENSA settlement, which created a $4.875 million fund dedicated to local environmental projects in the USVI, and the 2014 Cemex Concretos settlement, which included a $2.36 million land donation to promote conservation in Puerto Rico. EPA, HOVENSA LLC, Clean Air Act Settlement(Jan. 1, 2011); EPA, Civil Enforcement Case Report (July 23, 2014). 

A more recent notable environmental enforcement outcome in the region includes the resolution that the DOJ and the EPA reached with Limetree Bay in the USVI, in 2021. DOJ, "United States Files Complaint and Reaches Agreement on Stipulation with Limetree Bay Terminals LLC and Limetree Bay Refining LLC Relating to Petroleum Refinery in St. Croix, U.S. Virgin Islands" (July 12, 2021). This settlement included mandatory corrective measures and certain reporting requirements. Notably, this enforcement action included the use of § 303 of the Clean Air Act, which grants the EPA emergency powers to immediately restrain pollution if it poses "an imminent and substantial endangerment" to public health, welfare, or the environment, even absent a statutory or regulatory violation. 42 U.S.C. § 7603. Since 1971, § 303 powers have been wielded 14 times; four of these instances occurred in the Biden administration. Juan Carlos Rodriguez, "EPA Leaning on Little-Used Clean Air Act Enforcement Tool," Law360 (May 16, 2023, 1:26 PM). This increased usage suggests the Biden administration is likely to continue using § 303 as an enforcement tool going forward.

The EPA has also brought multiple enforcement actions in the Puerto Rico/USVI region connected to the shipping industry in recent years. These actions have targeted shipping companies, marinas, and maintenance facilities, as well as individuals. For example, Ionian Management and its entities and executives have faced multiple criminal enforcement actions related to illegal use of high-sulfur diesel fuel aboard the M/T Ocean Princess, along with obstruction charges for falsifying records and lying to investigators. See, e.g., DOJ, "Tankship Commercial Manager Convicted of Violation for Air Pollution" (Nov. 2, 2022). Penalties against the entities included probationary periods of up to four years and fines of $1.5 million per entity, as well as the submission of an environmental compliance plan; penalties against the individuals included probation, prohibitions on sailing in U.S. waters, and fines. 

It also bears mention that within a week of the May 11, 2023, announcement of the Puerto Rico/USVI taskforce, the DOJ and the EPA announced a settlement with BP Oil concerning violations at its Whiting Refinery in Indiana. As part of this settlement, BP will commit an estimated $197 million to capital improvements and pay a $40 million civil penalty—the largest such penalty ever paid for a Clean Air Act settlement of a stationary source. DOJ, "Justice Department and EPA Announce Settlement to Reduce Hazardous Air Emissions at BP Products' Whiting Refinery in Indiana" (May 17, 2023). Thus, while Puerto Rico and the USVI have now achieved special status as an environmental enforcement hotspot with the establishment of the regional taskforce, it is evident that the Biden administration's enforcement efforts will remain broadly directed, with an emphasis on underserved communities.  

As part of this effort, in June 2023, the DOJ's Civil Rights Division announced a settlement with the city of Houston in an environmental justice investigation concerning illegal dumping in Black and Latino communities. This marked only the second time an environmental justice settlement was reached under federal civil rights statutes, building upon the precedent established by the DOJ's May 4, 2023, settlement with the Alabama Department of Public Health over wastewater disposal.

What remains to be seen, however, is what, if any, impact the Supreme Court's landmark decisions in a pair of cases—Students for Fair Admissions Inc. v. President & Fellows of Harvard Coll., 599 U.S. ___ (2023) and Students for Fair Admissions Inc. v. Univ. of N. Carolina, 599 U.S. ___ (2023)—may have on the Biden administration's continued efforts in this regard. The Court, in both cases, emphasized that the explicit use of race as an independent factor in admissions is ordinarily prohibited under the Equal Protection Clause, unless necessary to achieve a compelling state objective. A six-Justice majority concluded that the Harvard and UNC admission policies did not satisfy that strict standard. A concurrence by Justice Gorsuch took the position that the universities' admissions policies also violated Title VI of the Civil Rights Act, which prohibits race discrimination in federally funded programs. As our colleagues have noted, that decision is "likely to have far-reaching consequences." Jones Day, "U.S. Supreme Court Limits Affirmative Action" (2023).  

As part of Executive Order 14008, the Biden administration announced the Justice40 Initiative, which mandates that at least 40% of the benefits of certain federal programs must flow to disadvantaged communities. In the past, race has played some role in decision-making in such environmental justice initiatives, but those policies may shift in response to the recent decisions. At the same time, it is reasonable to expect that targets of enforcement actions may challenge the validity of the underlying actions by the federal government as potentially running afoul of the Supreme Court's holding in the affirmative action cases.

Three Key Takeaways 

  1. The DOJ's and the EPA's pronouncements and enforcement activity reinforce the Biden administration's commitment to environmental justice. Companies should be prepared for heightened environmental scrutiny from the DOJ and the EPA, especially in communities that are overburdened and underserved.
  2. Companies whose activities are governed by the Clean Air Act should be prepared for an uptick in enforcement activity, including enforcement actions under the EPA's emergency powers established by § 303 of the Clean Air Act, which can be wielded absent any legal or regulatory violation. 
  3. If and as appropriate, companies should consider conducting corporate audits and pursuing other measures to gauge—and, if necessary, enhance—the state of their compliance with appliable environmental laws and regulations, and to ensure that relevant aspects of their compliance programs extend to corporate operations in areas likely to be a focus of enforcement activity, including Puerto Rico and the USVI.
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